Eurozone Debt Crisis: Tougher Choices

In the early 1990s EU governments had to choose between defending their exchange rates and the health of their economies. Now they have to choose between disappointing the bond markets and imposing austerity on their voters.

Firefighting: The sovereign-debt crisis has echoes of the ERM debacle“, The Economist, 14 July 2011

Three major uncertainties are rattling the markets:

  • the lack of EMU political leadership as regards (i) co-ordination across countries and with the ECB as well as (ii) a reluctance to push through vital restructuring/austerity packages
  • weak growth prospects that mean a severely reduced ability to repay debt as well as added stress for the banking sector
  • the inadequacy of existing bail-out funds

For a useful overview, see “Europe’s debt crisis: Fudge, the final frontier, The Economist, 10 Sep 2011.

Bundling in academia

Academic publishers have jumped deftly from paper to the internet. For more than a decade the dominant model has been the “big deal”. Publishers sell access to large bundles of electronic journals for a price based on what colleges used to pay for paper ones. Prices of big deals rise at about double the rate of inflation.

This model has provided an unprecedented wealth of material to researchers and fat profits to publishers. But fiscal crises, particularly in America, are straining big deals. State funding per university student in Arizona has fallen by roughly half since 2007-08. Libraries have taken a hit.

A library with a bundled subscription deal cannot make ends meet by dropping a few journals, as it could in the old days. Instead it must take the drastic step of leaving the all-you-can-eat buffet for the à la carte restaurant……